The Futures of Farming

By
Elizabeth Rush

From the towers of Wall Street to the dairy farms of New Jersey, a guided tour of the financialization of food.

Photo courtesy Dean Carlson

Just off of Country Road 518 in Hopewell, New Jersey, sits Double Brook Farm. It’s run by a self-exiled New Yorker but it’s not one of those now-standard upstart farms, with roving bands of earnest college kids tending rocket and a hearty couple of ex-Brooklynites overseeing the whole grass-fed operation. Double Brook’s turn-of-the-century barn, its grazing cattle, and its hundreds of Rhode Island Reds clucking and strutting about all belong to Jon McConaughy, a 46-year-old with an all-American face, a football player’s build, and a beautiful wife. Last year, McConaughy exchanged a two-decade-long career as a commodities trader on Wall Street for these two hundred acres.

Double Brook, a small farm specializing in grass-fed meat, free-range poultry and sun-dried vegetables, symbolizes one of the most unexpected turns the American economy has taken in recent years. For decades, banks have shied away from granting loans to farmers because, like restaurants, they are considered risky investments. But the tides might be turning as the price of nearly every commodity on the face of the earth is on the rise.

Jon McConaughy and wife Robin

“Farming is the new ‘good investment,’” says McConaughy, who grew up in the dairy country of rural New Jersey, only five miles from Double Brook. “I always knew I was going to return to the farm. But I am not the only banker-turned-farmer—it’s a trend.”

Last month I met Dean Carlson, another member of the growing sect of Wall Streeters gone AWOL, at a TEDx talk in Phoenixville, Penn. Carlson’s seventeen-minute presentation was one of the most powerful I have ever witnessed. In it, he explained the Rule of Seventy, a method commonly used in finance to estimate the time it will take for an investment to double. Divide seventy by the projected annual growth rate and you get the number of years it will take for the growing thing to be twice as big. An economy with a ten percent growth rate, for instance, will double in seven years’ time. As with any exponential function, the base variable (the economy in this case,) must grow bigger and bigger at an ever-increasing rate. Two hundred years down the line, if that same economy keeps growing at ten percent per year, it will be five hundred times as big as it is today, and two hundred and seven years down the line it will be a thousand times its original size. When Carlson applied the Rule of Seventy to food production he became scared, if not paralyzed, with fear.

Like McConaughy, Carlson traded his three-piece suit for some dungarees and a whole bunch of cattle. He purchased Weybrook Farm, which rests in the verdant swath of land just northwest of Philadelphia known as Chester County, in 2009.

Carlson’s Weybrook Farm (Photo courtesy Dean Carlson)

Carlson has a quiet way about him, a lip that turns slightly up at the corner, and a slow drawl that makes you think he has spent his entire life tending farm animals. When I asked Carlson, who is in his mid-forties, why he chose to invest in livestock and years of hard labor, his reasons were straightforward enough. “Exponential growth, the idea of having to consume more to keep our economy afloat, always bugged me,” he told me. “It can’t hold. I figured it out over time. Then I watched the 2009 bailout happen and saw the depth to which we would defend that very idea. Right around then I was reading The Omnivore’s Dilemma. I saw that food costs are going to go up, and how do you protect yourself against that? After twenty years on Wall Street I knew this much: an individual can’t get involved in the financial side of things because the game is rigged in favor of the banks. The only thing I came up with was to get involved in farming itself. ”

* * *

You may have heard it before: Food is the next bubble. Between 2002 and 2008, the price of wheat nearly quadrupled, rising from three to eleven dollars a bushel. According to the senior economist for the U.N.’s Food and Agricultural Organization, the cost of food has increased, on average, fifty to sixty percent a year in recent years, forcing many in poor countries to spend half their take-home pay to put food on the table. With food prices doubling every two years in some places, a bag of rice that costs a dollar today will cost five and a half dollars in four years and $41 in 2022.

But what does this Food Bubble look like? In Egypt, food riots turned into the toppling of Murbarak in 2011, and in Bangladesh three years earlier, tens of thousands of textile workers demanded higher salaries to meet the skyrocketing cost of food. Here, however, in our own backyards, grain subsidies shield American consumers from feeling the crushing price of wheat. But the relative safe remove from which we view this crisis will not last forever.

Four years ago, Dr. Frederick Kaufman, a specialist in food systems and Americans’ historic habits of culinary consumption, asked a daunting question for any writer: “What’s next?” Kaufman, a longtime resident of Manhattan’s financial district, had spent decades writing about eating. He was ready for something new. The answer, according to Kaufman, was obvious. He would have to write about hunger, the ugly flipside of food.

“I was having a lunch meeting with my editor. When we decided on doing a story about hunger, silence descended on us. To be honest, we were afraid. We didn’t really want to go there,” Kaufman says, recalling that 2008 meeting with his editor at Harper’s Magazine. “But it did have that newsiness that a good story needs. There were more people hungry on planet Earth than ever before in 2008, despite it being a bumper year for crops.” Kaufman scuffs his shoes along the granite slab sidewalk, tugging at the zipper of his fall leather coat. His flinty blue eyes catch mine, and he stops speaking, waiting for my note-taking to catch up with his rapid speech.

It is October and Kaufman and I are sitting outside the Federal Reserve in Lower Manhattan. A Hollywood Jew of the intellectual sort (his father was a screenwriter twice nominated for Academy Awards,) Kaufman has spent half of his career writing for Harper’s. He went on to write that article about hunger, and subsequently published a book, “BET THE FARM: How Food Stopped Being Food,” in 2012.

Kaufman, whose general enthusiasm is tempered by a sharp and yet non-aggrandizing intellect, and I are chatting in front of a set of black wooden doors, the likes of which I haven’t seen since strolling down the Rue de Lille in Paris. At least forty feet high, they look like it would take a battering ram to make them budge. The grates covering the Fed’s windows are strangely thick—as though the iron has been placed in a microwave and puffed up like a marshmallow. The walls of the Federal Reserve are fashioned from stacked blocks of sandstone and limestone, mixed by York & Sawyer, famous across New England for their Florentine-inspired bank designs. Each stone block is roughly three by five feet. Underground, beneath this behemoth of a building, sits a vault that holds more than $194 billion in gold bricks.

The Federal Reserve (Photo by Elizabeth Rush)

“I brought you here for a reason,” Kaufman tells me. “This is 33 Liberty Street, where both money and debt are manufactured.” In 2009, the Federal Reserve printed an unprecedented one-and-a-quarter-trillion dollars of new money in a single day, he says. “Out of the bowels of the Fed, more bills magically appeared and they used it to purchase debt–home mortgages, business loans, school loans.” The Fed purchased about one-fifth of our county’s mortgage-backed securities. “That’s what Occupy Wall Street doesn’t quite understand,” Kaufman adds. “You can’t just get rid of debt, of student loans and the like, because money enters the market as debt. That’s what it is, at the core.”

From this moment forth, every step of my Kaufman-led tour of the increasingly securitized financial district is monitored. Five security guards walk past us while we sit, staring at the double doomsday doors. One cop car cruises by, slow and deliberate. Just across Liberty Street from the Federal Reserve is the corporate headquarters of JP Morgan Chase, recently splashed across headlines when Occupy Wall Streeters dumped five-gallon-buckets of human excrement over the bank’s public plaza. The culprits were caught, thanks to surveillance cameras, and in retaliation JP Morgan Chase closed the public plaza at the base of its sixty-story high headquarters.

Kaufman chose to meet me here, on Liberty Street, where the Federal Reserve and one of the biggest banks in the world meet, because he’d come to understand the significance of the interplay between these two entities. Such a relationship, he argues, explains why folks like McConaughy the farmer have given up the Wall Street game, and why people from Dhaka to Cairo are rioting for food.

* * *

Kaufman began his investigation into hunger with what he thought was a relatively easy question: Where does the price of food come from? His foodie friends had no idea. They were interested in slow food, and the traditional curing methods of Tibetan yak farmers. And Kaufman’s banker buddies didn’t want to go there because, he says, they were afraid of “holding the bag for 900 million starving people.” So Kaufman called Daryll E. Ray, director of the Agricultural Policy Analysis Center at the University of Tennessee, who advised him to investigate Commodity Index Funds.

Frederick Kaufman (Photo by Elizabeth Rush)

Over the past twenty years, Wall Street has become increasingly invested in America’s food production. It started with the invention of the Commodity Index Fund (CIF) by Goldman Sachs in 1991, which allows bankers to buy and sell shares of wheat, soy, cottonseed, and corn oil futures (among countless others) as if they were Apple stock. Most of the big banks involved in the real estate bubble—JP Morgan Chase, Barclays, Morgan Stanley—have their own unique CIFs, which have provided them with billions of dollars in relatively risk-free investments that they hedge and move around to turn a profit.

“Commodities are a futures market,” Kaufman explained, noting that it took him “almost a year to figure out how futures work.” He broke it down for me into the four most basic components:

- “One, we have a need every day for products that only come out of the earth once, maybe twice a year. It’s feast or famine and the cost of these goods once was dependent upon where we are in the growing cycle.

- Two, civilization—philosophers, doctors, teachers, and all of us city-dwellers—we need easy access to food year-round.

- So we arrive at the third truth, which leads to a futures market—the need for price stabilization for all of us, farmers and city dwellers alike, to survive. If wheat costs one dollar a bushel in autumn and one hundred dollars a bushel in winter, no one is happy.”

Kaufman went on to describe the actual invention of a futures contract, which he compared to a promissory note that guarantees the future purchase of a select commodity at a set price, often a tiny bit lower than the current going rate.

“Everyone knows the risks involved,” he told me. “And everyone is buying and selling and trading, and traditionally the market itself is kosher, because everyone involved is playing by the rules. The purchases and the sales equal each other out, thus stabilizing the price.”

But over the past two decades, commodities markets have undergone a veritable sea-change. As with almost everything Goldman Sachs touches, their CIF was an overnight sensation, leading other banks to concoct their own unique CIF elixirs, each placing a slightly different weight on their chosen commodities. Thomson Reuters, for example, invests five percent of its fund in coffee, six percent in corn, six percent in live cattle, six percent in natural gas, one percent in orange juice, five percent in sugar, and so on. Each fund’s dispersal of investments is unique. While commodities markets have traditionally had space for speculators who provide liquidity on which farmers rely to keep their businesses afloat, CIFs siphoned more money into commodities than ever before. By 2007, the CIF phenomenon was snowballing—some might say out of control.

* * *

Pick up the business section of the newspaper and you are bound to see a headline linking farmlands and Wall Street. The exponential association between the two began in 2007, when food prices skyrocketed. Jeremy Grantham, founder and chief strategist of the famed asset-management firm GMO and a “bubble” prediction specialist, titles his latest quarterly letter (followed by many with cult-like devotion) Welcome to Dystopia! Entering a long-term and politically dangerous food crisis. In it, he paints a rather grim picture of rising commodity costs thanks to water shortages, erosion, climate change, depleted fertilizer stocks, and a slowing rate of grain productivity, which results in a state where “rising food prices will make food too expensive for hundred of millions.” Grantham’s solution: “For any reasonable investment group with a ten-year horizon or longer, one should move steadily to adopt a major holding of resource related investments…forestry, farms…and stuff in the ground.” In other words: The cost of food—i.e. “stuff in the ground”—is certain to rise; buy your stock now.

While many, even my favorite recipe writer Mark Bittman, laud Grantham’s insights into agricultural catastrophe and the work he does with his foundation— which pumps a meager ten million dollars (about 1/10,000th of the money he manages for GMO) into organic agricultural research every year—most fail to understand what a massive investment in “stuff in the ground” would do to those who can barely afford that stuff at its current going rate. “This commodities thing may turn out to be the most interesting call of my career,” Grantham recently told The New York Times.. While Grantham is right that commodities are a hot ticket item on Wall Street in a strange and completely unprecedented way, he refuses to acknowledge that treating “stuff in the ground” as stock is already a contributing factor to the ever-growing hunger epidemic he so aptly describes. No matter how shortsighted big banks may be about the relationship between their investment in commodities and the effects it might have on consumers, who are already spreading half of their annual income on food, one thing is for certain: Divorcing real food stuffs from the imaginary food-based futures trading is impossible. And betting the farm has historically been about as dumb as tossing the baby out with the bath water.

About a week after my Wall Street walking tour with Kaufman, McConaughy—the commodities trader turned farmer—explained to me that the common wisdom from financial advisors—to invest five to ten percent of a portfolio in agricultural commodities—will lead to a classic case of demand exceeding supply. While he was initially skeptical of blaming Wall Street, he eventually conceded, “I think you certainly can make the argument that if you get more people investing in commodities the price will go up.”

* * *

“My daughter recently had me into her tenth grade class to give a talk about the cost of food,” Kaufman says as we walk past the building where George Washington was inaugurated, past Brown Brothers Harriman, one of the oldest and largest investment banks in America, and past Zuccotti Park, home of the Occupy Wall Street movement. “I sat in front of the class and took a slow bite out of a chocolate glazed donut. It was 8:30 in the morning and the students were slack-jawed.”

Out of his bag Kaufman pulled a second, perfectly glazed donut. He asked a simple question. “What is the most someone will give me for this?” One kid offered five dollars, another offered ten. Everyone wanted the sole remaining donut in the room. Finally, Kaufman handed the pastry to the student who handed him a hundred dollar bill. (Only in New York City; the kid, it turned out, was the son of an Internet pioneer.) Then, Kaufman brought out an entire box of donuts from behind the desk. Suddenly the hot ticket item of the morning was free. Everyone got one, and no one wanted them quite as much.

On one hand, Kaufman was explaining supply and demand; on the other he was arguing for price transparency in commodities markets. When something is vital to human survival, the mechanisms that decide its price ought not only to be knowable to everyone but should also be organized in such a way that they serve the interests of the world’s population. Estimates show that there are now twelve times as many future investments in wheat than there is actual wheat in the ground. The cost of the commodity is rising and no one can tell why at first glance, but buying more wheat futures suddenly seems like a good idea, so its price rises more.

“The wheat market is relatively small,” explains McConaughy, of Double Brook Farm. “And it’s fragile—the people hedging are supposed to be farmers.” Traditionally, it took someone with deep knowledge of a particular commodity to successfully hedge in a commodities market—someone who, for example, could chew on a grain of wheat and decipher the quality of the product. But CIFs gave bankers a relatively safe way in, according to Kaufman. Banks only had to put a five-percent good faith deposit on any commodity they wanted to purchase, storing the remaining ninety-five percent in more familiar financial nooks and crannies. Over the past decade or so, banks have entered the food market full force, well beyond traditional buying and selling of physical, agricultural commodities over the past hundred years. And because of the small amounts of money they were required to actually invest in the commodity, even if it lost ground, the banks capitalized on the perpetual transaction fees that were associated with rolling their investment over. The recent overturn of the Dodd-Frank resolution to place position limits—that is, limits on how many wheat stocks, for example, a commodities trader is allowed to hold—huge banks are now able to buy up millions of contracts for future wheat production. When one bank does it, the rest often follow, and the price of food itself rises. Without position limits, the future looks bleak for those who need the cost of food to remain relatively stable, including you and me, and McConaughy and Kaufman, and more immediately those who are already spending half their take-home pay on food.

Jon McConaughy, of Double Brook Farm (Photo courtesy Jon McConaughy)

“The problem is not going away,” Kaufman says as we walk through the vaulted arcade along the Barclay-Vesey Building—now home to the headquarters to Verizon Communications—so named because it sits between Barclay and Vesey Streets, the later home. Built in 1927, the Rafael Guastavino tile-covered walkway is a rarity in New York, and the building is widely considered the first Art Deco skyscraper. Barclay Street is named not after the banking institution, but after Reverend Henry Barclay, one of New York’s early settlers from the preeminent Barclay clan, among the first of New York’s ruling class. The other Barclays, the modern-day bank, has one of the largest CIFs of all, pulling in over three billion dollars in profits in a single year. Recently, a stream of headlines ran in international newspapers linking Barclays to the rising cost of wheat. “Barclays makes £500m betting on food crisis” read the UK’s Independent in September of this year.

* * *

Along the Hudson River, just a quarter-mile west of One World Trade Center and the Barclay-Vesey Building, and a stone’s throw from Goldman Sachs, sits the Irish Hunger Memorial. The raised plateau of grass holds a traditional Irish cottage, and rocks transplanted from the Emerald Isle, honoring the million people who died of starvation there between 1845 and 1852. When we get to the water and the memorial, Kaufman stops. The day is bright and sunny and the wind whips up whitecaps on the Hudson.

“During the famine there was an incredible amount of food in Ireland but the food was shipped to London because people in London could pay for it. And the people in Ireland could not,” Kaufman explains. He tells me that the memorial always reminds him of Amartya Sen, the 1998 winner of the Nobel Prize in economics, “who brought me to my first real watershed idea in my investigation of hunger: People don’t go hungry because there isn’t enough food; they go hungry because they can’t afford to eat.”

While the Irish Famine might seem far off, hundreds of millions of pounds of grain go uneaten in American grain silos because they are impossible to sell at their record high prices. In 2007, right when the price of commodities shot through the roof, a flip occurred. Thanks to a complicated set of circumstances ranging from drought to a sharp spike in the cost of crude oil, and, perhaps most presciently, to the fact that more and more speculators began investing in commodities themselves. Where America once had a grain deficit, we suddenly had a surplus, according to Doane, a nearly century-old firm specializing in agricultural analysis. Food prices shot up, thousands of tons of U.S. grain went un-purchased and uneaten, and food-related riots broke out in more than thirty different countries. What had happened? Were people actually being priced out of the ability to eat?

An estimated one in seven people on the planet are at risk of starving to death, and that number is on the rise. But that figure is hard to imagine when we rarely, if ever, see a starving person on the streets of New York. Visit Bangladesh, though, and you get a much sharper sense of what this scary ratio looks like. Loss of crops—thanks to increased salinity in the water table from rising sea levels—and a general movement away from failing farms toward the city where more westernized wheat-based diets reign, means that an ever increasing number of people are “food insecure.” Nearly half the global population is labeled as such, and if the price of food rises at the current rate this will lead to an increase in food insecurity by a factor of eight percent between now and 2016. Apply the Rule of Seventy, and you learn that in 35 years all of Bangladesh will be hungry.

Farmers in Bangladesh, where fluctuations in global food prices can be felt in real terms (Photos by Elizabeth Rush)

Last year, when I was working on a story about India’s border fence, the longest geopolitical barrier in the world, I interviewed Bangladeshi farmers whose crops and soil had been ruined by an unprecedented flood the previous year. The villagers of Allatoli lamented the fact that they now had to walk miles over a dust desert just to get to arable land. And whether or not that land could produce enough to sustain the village was still very much up in the air. Faharul, a young boy who worked the lentil fields arduously with just a sickle, said, “I may try to cross the border and get to the city [Kolkata]; I think my chances for survival will be better there.” But with the loss of Faharul’s labor in the countryside, Bangladesh loses its ability to be self-sufficient in terms of food production, and its dependence on imported commodities rises commensurately.

* * *

Kaufman and I amble along the Hudson River to North End Avenue and the New York Mercantile building, bought by the Chicago Mercantile Exchange (CME) in 2009. A non-descript, if sleek, fifteen-story outpost on the northern edge of Battery Park City, the building is far less interesting than the previous incarnations of the commodities trading markets, which include the palladium-window-laden and red brick grand dame at 6 Hudson Street, and the copper-corniced and filigree-covered Mercantile Building on Broadway, whose ground floor houses an Urban Outfitters today. Commodities exchanges began in the nineteenth century to facilitate and regulate the buying and selling of life’s necessities as an increasing number of people moved from farms to cities. Founded in 1898, CME was first the Chicago Egg and Butter Board, expanding over the years to encompass everything from cattle to different classes of milk, and wheat, eventually privatizing in 2000. Like the CME, the New York Mercantile Exchange began as a place where dairy merchants got together and sold their product, growing over the years to include all different types of “stuff from the ground:” oil, dried fruits, gold, precious metals, potatoes, wheat and poultry.

A walking tour of the "Futures of Farming" locations (Map by Elizabeth Rush)

But the once famous grain pits where traders gesticulated wildly and chomped on wheat to determine its quality have been replaced by the ability to trade online. The transaction age divorced those who buy and sell commodities from the commodity itself. Today, such trading is no longer about the actual quality and quantity of the product; it’s about numbers on a screen. McConaughy, who worked at Credit Suisse as a commodities trader from 2007 to 2011, said of his previous line of work, “I was just trying to get a return for the bank’s money. I looked at the relationship between products. It didn’t matter if it’s a stock or a bond or a commodity like oil, cotton, or wheat.” What we once treated like concrete items upon which our lives depended, are today treated like stock. The problem is that food isn’t Apple, or Facebook. When a high-tech company’s stock goes up that’s good, but when food stocks go up that’s not so good, because that means food costs more.

Critics who disagree with the argument that futures speculators are beginning to cause a new era of worldwide food shortages are quick to assert that speculators have long been important players in commodities markets, since their added capital partially facilitates the perpetual dance of buying and selling that is responsible for historic price stability. Both of the bankers-turned-farmers I interviewed were skeptical of the assertion that these Commodity Index Funds could actually impact the price of food in the long term. “There is always going to be a buyer and a seller,” Carlson, the Pennsylvania farmer and former banker, said when asked to explain how increasingly short-term volatility in prices could mean price stability in the future. “Often, the bank not only buys the future, they also sell the future contracts, kind of canceling itself out.” Carlson is right—that is exactly how these markets have historically worked. But traditionally, in order to make money trading a commodity you had to have some kind of intimate knowledge, and often dependence upon, the thing itself—inherently limiting the number of speculators who would want to get involved. By subverting masterful experience with reliable math, commodity indices have opened the floodgates for investment well above and beyond that which commodity markets have normally seen.

I asked Kaufman why the Chicago Mercantile Exchange had purchased the New York Mercantile in 2009.What had that meant for the future cost of food? Is New York the new epicenter of everything commodity related? “No, he replied. “It’s simpler than that, it doesn’t matter if you are in New York or Mumbai, or Jersey City. We don’t need to be close to or understand the thing we sell anymore; just find what you want and trade it in cyberspace.”

* * *

Farming is a complicated calculation, an intricate system of inputs to reach a single, universally desired goal: Good, healthy eating at a price that people can afford. It doesn’t happen in cyberspace—food flows from the ground. But the bigger that “Big Ag” grows and the more involved the financial institutions become in the price of food, the further we get from realizing just what it takes to feed the planet.

Carlson argues that for way too long oil has been our saving grace. Oil, he says, is the only way that American farmers, who account for just one to two percent of the national population, can feed the other 98 percent of us. But oil used to sew, reap and ship food, “is finite, and as oil goes away we are going to be at a loss for how to feed ourselves,” Carlson notes. He suggests that now is the time to start figuring out how to cut back on our agricultural reliance on oil. The idea seems simple at first, but it requires rethinking the agricultural system from the ground up—forgetting about government subsidies and the corporate farm entities that grow nearly eighty percent of our food supply and truck it around in eighteen wheelers.

Last year, Carlson planted traditionally fat-rich fruit trees like persimmon and mulberry to feed his pigs, and rotated his cattle to a fresh pasture each day, making their diet local and organic. He is working toward sustainability in the long term, which, in his definition, means food that is neither tied to economic futures nor to oil for production. But reinventing the modern agricultural wheel is full of misfires for a man who once turned a profit not by turning soil but by swapping stock. Last year, Carlson purchased dozens of handsome Scottish Highland cattle, which he had to sell after one of them horned his farm manager in the chest. And the market that he runs on the premises where he sells handsome slabs of his grass-fed meat has yet to make him money, signaling the difficulty that most small farms face: Staying in business.

“I think it is close to impossible to begin a successful farm without a significant capital investment. And banks don’t lend to farms because they are seen as risky business,” says McConaughy. “I want to be the proof that opening a small farm is no longer as volatile as it once was. I am not the only one, although some are less ethically driven. There are loads of Wall Street people buying up farmland. Does that make us farmers or investors? I think it’s a little bit of both.”

I recently read about a single banker who bought up a considerable portion of the Canadian wilderness, betting that a warming planet will extend the length of the growing season, turning typically chilly Canada into a new grain belt. Sandy Lewis, an ex-broker whom I read about in Kaufman’s book, sunk millions of his Wall Street-derived capital into an expansive 12,000-arce plot of land in upstate New York, just west of Lake Champlain. As the price of farmland rises about twenty percent per year, the opportunity to buy large chunks of productive land is increasingly restricted to the few who have money enough to make the leap.

* * *

As the day begins to wane, Kaufman and I finally find ourselves at Goldman Sachs’ corporate headquarters, on West Street. It’s Sunday and still there is a line of limos waiting out front to whisk away the young bankers who have come in on the weekend to put in overtime hours. About ten guards circle the premises on foot, and two plain-clothes security men are propped on a bench in Goldman Alley. They look about as bored as humanly possible. Nowhere on the building they are protecting does it say “Goldman Sachs.” To a layperson the high level of security would seem a bit outrageous.

Goldman Sachs headquarters (Photo by Elizabeth Rush)

Finished just two years ago, 200 West Street, as the building is known, has attracted a fair amount of controversy. There was a public outcry over the $1.65 billion dollars it received in tax-exempt government bonds earmarked for stimulating economic development in the financial district after 9-11. Just to put that number in perspective, Goldman Sachs’ net earnings average about one billion per quarter, meaning that without government help it could have financed the new construction in less than half a year. According to Paul Golderberg, the longtime architectural columnist for The New Yorker, unlike many of Goldman’s financial institution predecessors, who built the tallest, most ostentatious buildings money could buy and then painted their names all over the things in bright neon lights (as with Chase Manhattan Bank’s skyscraper), Goldman has opted for understatement, if not invisibility.

As we circle the building, Kaufman’s hyper speech slows down for the first time all day. “It’s truly amazing how they got their hands around such big things,” he says, as he launches into a discussion of Goldman. One of the first to create and invest in CIFs, Goldman liquidated a large percentage of their holdings just before the first controversy surrounding CIFs broke in 2009. Commodities have rebounded nicely, and if investment bankers take the advice of Jeremy Grantham, the bubble-prediction specialist, as so many do, another rush to buy up wheat, corn, cattle and cotton seed oil, lies in wait.

Kaufman and I stroll past the Tribeca branch of Shake Shack, where youth soccer players have gathered with their families after a Sunday tournament. Bankers’ kids, writers’ kids and celebrities’ kids all co-mingle, slurping down “fair” milkshakes and hormone-free burgers. For the first time all afternoon, Kaufman runs into people he knows: A big-wig editor at Slate, a banker buddy, and the stay-at-home mom the neighborhood calls “the Queen of Lower Manhattan.” It occurs to me then, for the first time in my life, really, that the financial district is actually a neighborhood all its own. Kaufman has lived down here his entire adult life, since graduating from Yale in 1983. He even coached his daughters’ soccer teams on the same fields where these kids just played.

But the more Kaufman chats with his neighbors, the more I sense a subtle tension. Through his research and writing, he has exposed a not-so-attractive back alley of our wealth production and consumption machine, the epicenter of which is right here on these Astroturf fields in the shadow of Goldman Sachs. The price of food is determined in his friends’ and neighbors’ own backyard, where the twin towers fell and where their kids can pay a hundred dollars for a donut during a class presentation. Of course, they probably don’t think about the global ramifications of the financialization of food all that often, certainly not as often as Kaufman. Still, what they might not understand is that Kaufman is writing of a disaster that has already taken place elsewhere and that he is trying desperately to prevent that disaster from coming home.

On our way back to Wall Street we pass through City Hall Park, where a giant inflatable ketchup bottle jiggles in the wind. This tribute to America’s favorite condiment is just one of many art objects scattered across the grounds by the city’s Public Art Fund. The yellow label splashed across the bottle reads “Daddy’s,” in antiquated 1950’s-style script—a relic of a seemingly simpler time, before the invention of that first Commodity Index Fund, back in 1991, before food stopped being food, and its economic inflation became a practice too obtuse for most people to swallow.

Kaufman has seen what this future looks like, and he’s fearful. Out of earshot of his Wall Street friends and acquaintances, he turns to me. With the half-ironic tone of a man trying to cloak significance in humor he says, “When hamburger meat costs eighteen dollars a pound, and the middle class can’t afford this luxury anymore, it’s going to be the end of world.”

* * *

Elizabeth Rush’s work has appeared in Granta, Le Monde Diplomatique, Frieze, and Asian Geographic, among others. Her book, Still Lifes from a Vanishing City, about the re-appropriation of colonial city space in Yangon, Myanmar is forthcoming this winter. She is a founding member of Makoto Photographic, an alternative agency specializing in long-form photo journalism.